A recent case has served as a stark reminder of the importance of complying with sponsorship regulations. In Prestwick Care Ltd & Ors v Secretary of State for the Home Department [2023] EWHC 3193, the High Court upheld the Home Office's decision to revoke a company's sponsor licence. It is relevant to all companies that sponsor overseas workers in the UK.
The Skilled Worker visa is the main immigration route for non-British/Non-Irish nationals to work in the UK. In order for foreign nationals to work in the UK under this route, they need to be sponsored by a company which holds a licence from the Home Office, known as a sponsor licence. Companies may then use this licence to employ foreign nationals in highly skilled and qualified roles, providing there is a genuine vacancy to fill within the company.
The Home Office sees sponsorship as a privilege which must be earned and companies which hold a sponsor licence must comply with a range of duties and obligations. In the case of breaching sponsorship duties, the Home Office can downgrade a licence (for minor breaches) or revoke the licence altogether.
Background
In October 2022, following a routine Home Office audit, Prestwick Care Ltd, a group of three companies who operated 15 care homes across the UK (together ''the Company'') was found to have been in breach of several of its sponsorship duties. The breaches led to the Home Office revoking the Company's sponsor licence in February 2023. As a result, the Company lost its right to employ overseas workers. Of its workforce of 857 staff, the 219 Skilled Workers sponsored under the visa scheme lost their right to live and work in the UK.
During their audit of the Company, the Home Office conducted interviews with sponsored workers and senior managers, which unearthed the following areas where compliance obligations had been breached:
- Genuine vacancies: Interviews with five senior care assistants that each held a sponsored Skilled Worker visa, revealed that their day-to-day duties did not align with the duties recorded on their Skilled Worker visas. In addition, there were also deficiencies identified in the workers' training, skills, and English language abilities, which the Home Office considered would have inhibited them from effectively carrying out their highly skilled roles. As a result, the Home Office was not satisfied that the role of senior care assistant represented a genuine vacancy at the care homes.
- Salary discrepancies: A worker had not been paid the salary recorded on her Skilled Worker visa, because her salary was reduced whilst she was undertaking training, and the Company had failed to update the Home Office of this change. The Home Office considered this a serious failing and found the Company's failure to report the reduction in salary was a breach of its sponsor duties and a mandatory ground for the revocation of its sponsor licence.
- Unexplained salary sacrifice scheme deductions: Additional payslip examinations revealed that some workers were not being paid the amount recorded on their Skilled Worker visa because of deductions to their pay which were marked as a 'salary sacrifice'. Some of the workers were reportedly unaware of the salary sacrifice scheme or the reason for the deductions.
The salary sacrifice scheme was considered by the court to have been a device to pay workers less than the contractual salary stated on their Skilled Worker visas and was called into question as a result.
- Sick pay issues: The Company had allegedly failed to pay some workers statutory sick pay and incorrectly advised them that sick pay was not available for their role.
The Company's failure to comply with statutory sick pay provisions meant that it had breached its duty to comply with UK employment law. All companies holding a sponsor licence have a duty to comply with immigration and wider UK law, including UK employment law, such as the National Minimum Wage and paid holiday entitlement.
- Recovery of recruitment expenses and other visa costs: The Company had recovered from several sponsored workers' payments made on their behalf to the Home Office of the Immigration Skills Charge. This charge is the annual rated cost of the Skilled Worker visa, which can range from £364 to £1,000 per year, per visa. This payment can strictly only be covered by employers and can never be passed on to the worker though any claw-back or visa support arrangement. Consequently, the Home Office found that the Company had committed a serious compliance breach recouping this charge.
Furthermore, a sponsored worker was reportedly required to agree to repay an "agency fee" prior to their visa renewal, despite there being no agency involvement whatsoever.
The court upheld the Home Office's findings, that these issues amounted to the unfair treatment of sponsored employees, as it put them in a position where they would become financially liable to the Company.
- Inadequate monitoring and record keeping: Sponsoring companies are required to maintain an adequate system for monitoring the visa expiries of their sponsored workers; ensure that personal employee details (home address and contact numbers) are up to date, and to ensure all employees have a valid right to work in the UK. In practice, companies can adopt different processes to meet these obligations, for example, a company may purchase HR software that monitors this information and is a central tool where employee details (i.e., right to work, contact details, etc) can be stored. However, the Home Office found that the care home had failed to produce any records demonstrating their monitoring of these details. Specifically, the Home Office found that a sample of eight employee HR files had no entries whatsoever, and several incorrect entries were found in relation to sponsored employees' home addresses. Consequently, the Company had failed to comply with its obligation to keep an effective monitoring and records system.
Conclusion
The Company argued that it had sought advice from lawyers and trade unions in an attempt to demonstrate their desire to comply with the law. However, the court held that the issue was not whether the Company was well intentioned to comply with the law, but whether it had in fact complied. In the circumstances, it was reasonable for the Home Office to have taken the view that it had not.
The Company also argued that the Home Office had failed to consider the impact the revocation of licence was going to have on their business. The court maintained that the Home Office's role was to ensure compliance and not to assess commercial consequences. The central question is, can I trust this sponsor to comply with the Home Office guidance? In this case, the Home Office was justified to take the view that it could not, and to revoke the Company's licence.
This case highlights the critical nature of sponsorship compliance for an employer when sponsoring workers. An employer's failure to comply with their sponsorship duties, their obligations as an employer and wider UK law obligations, can result in them losing the benefit of employing overseas workers, as well as the reputational and financial damage of having a sponsor licence revoked.
The Home Office has increased its level of audits and enforcement activity to its highest level since the Covid-19 pandemic. In parallel, the Government has also announced a three-fold increase to illegal worker fines which comes into effect on 13 February 2024.
It is therefore critical that employers review their compliance requirements and employment practices to ensure that they are effectively complying with their legal obligations and sponsorship duties. If you have any questions about this article or your compliance obligations, please contact us on the details below.